SEC Filing | Corteva Agriscience

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-38710

Corteva, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

82-4979096

(State or other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)

974 Centre Road,

Wilmington,

Delaware

19805

(302)

485-3000

(Address of Principal Executive Offices) (Zip Code)

(Registrant’s Telephone Number, including area code)

Commission File Number 1-815

E. I. du Pont de Nemours and Company

(Exact Name of Registrant as Specified in Its Charter)

Delaware

51-0014090

(State or other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)

974 Centre Road,

Wilmington,

Delaware

19805

(302)

485-3000

(Address of Principal Executive Offices) (Zip Code)

(Registrant’s Telephone Number, including area code)

Securities registered pursuant to Section 12(b) of the Act for Corteva, Inc.:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	CTVA	New York Stock Exchange

Securities registered pursuant to Section 12(b) of the Act for E. I. du Pont de Nemours and Company:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
$3.50 Series Preferred Stock	CTAPrA	New York Stock Exchange
$4.50 Series Preferred Stock	CTAPrB	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Corteva, Inc. Yes x No o

E. I. du Pont de Nemours and Company Yes x No o

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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.)

Corteva, Inc. Yes x No o

E. I. du Pont de Nemours and Company Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Corteva, Inc.

Large Accelerated Filer

Accelerated Filer o

Non-Accelerated Filer

Smaller reporting company o

Emerging growth company o

E. I. du Pont de Nemours and Company

Large Accelerated Filer

Accelerated Filer o

Non-Accelerated Filer

Smaller reporting company o

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Corteva, Inc. ☐

E. I. du Pont de Nemours and Company ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Corteva, Inc. Yes ☐ No x

E. I. du Pont de Nemours and Company Yes ☐ No x

Corteva, Inc. had 745,016,000 shares of common stock, par value $0.01 per share, outstanding at October 29, 2020.

E. I. du Pont de Nemours and Company had 200 shares of common stock, par value $0.30 per share, outstanding at October 29, 2020, all of which are held by Corteva, Inc.

E. I. du Pont de Nemours and Company meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q (as modified by a grant of no-action relief dated February 12, 2018) and is therefore filing this form with reduced disclosure format.

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CORTEVA, INC.

E. I. DU PONT DE NEMOURS AND COMPANY

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		Page
Explanatory Note
Part I	Financial Information

Item 1.	Consolidated Financial Statements (Unaudited)
	Consolidated Statements of Operations	3
	Consolidated Statements of Comprehensive (Loss) Income	4
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Cash Flows	6
	Consolidated Statements of Equity	7
	Notes to the Consolidated Financial Statements (Unaudited)	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	45
	Cautionary Statements About Forward-Looking Statements	45
	Recent Developments	46
	Overview	47
	Selected Financial Data	49
	Results of Operations	50
	Supplemental Unaudited Pro Forma Financial Information	55
	Recent Accounting Pronouncements	56
	Segment Reviews	57
	Non-GAAP Financial Measures	61
	Liquidity & Capital Resources	63
	Critical Accounting Estimates	66
	Contractual Obligations	67

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	67
Item 4.	Controls and Procedures	68

Part II	Other Information

Item 1.	Legal Proceedings	69
Item 1A.	Risk Factors	71
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	72
Item 5.	Other Information	73
Item 6.	Exhibits	74
Exhibit Index		74
Signature		75
Consolidated Financial Statements of E.I. du Pont de Nemours and Company (Unaudited)		76

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Explanatory Note

On June 1, 2019, Corteva, Inc. ("Corteva" or "the company") became an independent, publicly traded company through the previously announced separation (the “Separation”) of the agriculture business of DowDuPont (defined below). The separation was effectuated through a pro rata distribution (the “Corteva Distribution”) of all of the then-issued and outstanding shares of common stock, par value $0.01 per share, of Corteva, Inc., which was then a wholly-owned subsidiary of DowDuPont, to holders of record of DowDuPont common stock as of the close of business on May 24, 2019.

Corteva owns 100% of the outstanding common stock of EID (defined below), and EID owns, directly or indirectly, 100% of DAS (defined below). EID is a subsidiary of Corteva, Inc. and continues to be a reporting company, subject to the requirements of the Securities Exchange Act of 1934, as amended.

Unless otherwise indicated or the context otherwise requires, references in this Quarterly Report on Form 10-Q to:

• "Corteva" or "the company" refers to Corteva, Inc. and its consolidated subsidiaries (including EID);

• "EID" refers to E. I. du Pont de Nemours and Company and its consolidated subsidiaries or E. I. du Pont de Nemours and Company excluding its consolidated subsidiaries, as the context may indicate;

• "DowDuPont" refers to DowDuPont Inc., and its subsidiaries prior to the Separation of Corteva (defined below);

• "Historical Dow" refers to the Dow Chemical Company and its consolidated subsidiaries prior to the Internal Reorganization (defined below);

• "Historical DuPont" refers to EID prior to the Internal Reorganization (defined below);

• "Internal Reorganizations" refers to the series of internal reorganization and realignment steps undertaken by Historical DuPont and Historical Dow to realign its business into three groups: agriculture, materials science and specialty products. These steps include:

1.the April 1, 2019 transfer of the assets and liabilities aligned with EID’s material science businesses including EID’s ethylene and ethylene copolymers business, excluding its ethylene acrylic elastomers business, (“EID ECP”) to DowDuPont, which were ultimately conveyed by DowDuPont to Dow;

2.the May 1, 2019 distribution of EID legal entities containing the assets and liabilities of EID’s specialty products business (the “EID Specialty Products Entities”) to DowDuPont;

3.the May 2, 2019 conveyance of Historical Dow's agriculture business ("Dow Ag Entities") to EID; and

4.the May 31, 2019 contribution of EID to Corteva, Inc. Refer to the company’s Annual Report on Form 10-K for the year ended December 31, 2019 for further information.

• "Dow Distribution" refers to the separation of DowDuPont's materials science business into a separate and independent public company, effective as of 5:00 pm ET on April 1, 2019, by way of a distribution of Dow Inc. through a pro rata dividend in-kind of all of the then-issued and outstanding shares of Dow’s common stock, par value $0.01 per share, to holders of DowDuPont's common stock, as of the close of business on March 21, 2019;

• "Distributions" refers to the Dow Distribution and the Corteva Distribution;

• "Merger” refers to the all-stock merger of equals strategic combination between Historical Dow and EID;

• "Merger Effectiveness Time” refers to August 31, 2017 at 11:59 pm ET;

• "Dow" refers to Dow Inc. after the Dow Distribution;

• "DuPont" refers to DuPont de Nemours, Inc. after the Separation of Corteva (on June 1, 2019, DowDuPont Inc. changed its registered name to DuPont de Nemours, Inc.; and

• "DAS" refers to the agriculture business of Historical Dow AgroSciences.

Beginning on June 3, 2019, Corteva's common stock is traded on the New York Stock Exchange under the ticker symbol "CTVA".

This Quarterly Report on Form 10-Q is a combined report being filed separately by Corteva, Inc. and EID. The information in this Quarterly Report on Form 10-Q is equally applicable to Corteva, Inc. and EID, except where otherwise indicated.

The separate EID financial statements and footnotes for areas that differ from Corteva, are included within this Quarterly Report on Form 10-Q and begin on page 76. Footnotes of EID that are identical to that of Corteva are cross-referenced accordingly.

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PART I. FINANCIAL INFORMATION

Item 1.CONSOLIDATED FINANCIAL STATEMENTS

Corteva, Inc.

Consolidated Statements of Operations (Unaudited)


(In millions, except per share amounts)	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Net sales	$	1,863	$	1,911	$	11,010	$	10,863
Cost of goods sold	1,297		1,349		6,395		6,607
Research and development expense	284		289		837		857
Selling, general and administrative expenses	597		646		2,319		2,318
Amortization of intangibles	162		100		501		314
Restructuring and asset related charges - net	49		46		298		167
Integration and separation costs	—		152		—		694
Other income - net	30		59		120		90
Loss on early extinguishment of debt	—		—		—		13
Interest expense	11		19		35		112
(Loss) income from continuing operations before income taxes	(507)		(631)		745		(129)
(Benefit from) provision for income taxes on continuing operations	(117)		(104)		88		99
(Loss) income from continuing operations after income taxes	(390)		(527)		657		(228)
Income (loss) from discontinued operations after income taxes	—		22		1		(695)
Net (loss) income	(390)		(505)		658		(923)
Net income (loss) attributable to noncontrolling interests	2		(11)		18		15
Net (loss) income attributable to Corteva	$	(392)	$	(494)	$	640	$	(938)
Basic (loss) earnings per share of common stock:
Basic (loss) earnings per share of common stock from continuing operations	$	(0.52)	$	(0.69)	$	0.85	$	(0.32)
Basic earnings (loss) per share of common stock from discontinued operations	—		0.03		—		(0.93)
Basic (loss) earnings per share of common stock	$	(0.52)	$	(0.66)	$	0.85	$	(1.25)
Diluted earnings (loss) per share of common stock:
Diluted (loss) earnings per share of common stock from continuing operations	$	(0.52)	$	(0.69)	$	0.85	$	(0.32)
Diluted earnings (loss) per share of common stock from discontinued operations	—		0.03		—		(0.93)
Diluted (loss) earnings per share of common stock	$	(0.52)	$	(0.66)	$	0.85	$	(1.25)

See Notes to the Consolidated Financial Statements beginning on page 9.

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Corteva, Inc.

Consolidated Statements of Comprehensive (Loss) Income (Unaudited)


(In millions)	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Net (loss) income	$	(390)	$	(505)	$	658	$	(923)
Other comprehensive income (loss) - net of tax:
Cumulative translation adjustments	68		(297)		(507)		(471)
Adjustments to pension benefit plans	—		5		(6)		13
Adjustments to other benefit plans	1		—		3		(86)
Derivative instruments	(20)		—		(16)		23
Total other comprehensive income (loss)	49		(292)		(526)		(521)
Comprehensive (loss) income	(341)		(797)		132		(1,444)
Comprehensive income (loss) attributable to noncontrolling interests - net of tax	2		(11)		18		15
Comprehensive (loss) income attributable to Corteva	$	(343)	$	(786)	$	114	$	(1,459)

See Notes to the Consolidated Financial Statements beginning on page 9.

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Corteva, Inc.

Condensed Consolidated Balance Sheets (Unaudited)


(In millions, except share amounts)	September 30, 2020		December 31, 2019		September 30, 2019
Assets
Current assets
Cash and cash equivalents	$	2,768	$	1,764	$	1,980
Marketable securities	152		5		117
Accounts and notes receivable - net	5,627		5,528		6,574
Inventories	4,374		5,032		4,403
Other current assets	1,167		1,190		1,043

Total current assets	14,088		13,519		14,117
Investment in nonconsolidated affiliates	62		66		70
Property, plant and equipment - net of accumulated depreciation (September 30, 2020 - $3,712; December 31, 2019 - $3,326; September 30, 2019 - $3,186)	4,273		4,546		4,503
Goodwill	10,110		10,229		10,168
Other intangible assets	10,914		11,424		11,667
Deferred income taxes	289		287		270
Other assets	1,954		2,326		2,440

Total Assets	$	41,690	$	42,397	$	43,235
Liabilities and Equity
Current liabilities
Short-term borrowings and finance lease obligations	$	2,142	$	7	$	3,604
Accounts payable	2,994		3,702		3,014
Income taxes payable	168		95		126
Accrued and other current liabilities	2,430		4,434		2,249

Total current liabilities	7,734		8,238		8,993
Long-Term Debt	1,102		115		116
Other Noncurrent Liabilities
Deferred income tax liabilities	740		920		1,328
Pension and other post employment benefits - noncurrent	5,904		6,377		5,405
Other noncurrent obligations	1,864		2,192		2,132

Total noncurrent liabilities	9,610		9,604		8,981
Commitments and contingent liabilities
Stockholders’ equity
Common stock, $0.01 par value; 1,666,667,000 shares authorized; issued at September 30, 2020 - 747,492,000; December 31, 2019 - 748,577,000; and September 30, 2019 - 748,390,000	7		7		7
Additional paid-in capital	27,895		27,997		28,072

Accumulated deficit	—		(425)		(397)
Accumulated other comprehensive loss	(3,796)		(3,270)		(2,667)
Total Corteva stockholders’ equity	24,106		24,309		25,015
Noncontrolling interests	240		246		246
Total equity	24,346		24,555		25,261
Total Liabilities and Equity	$	41,690	$	42,397	$	43,235

See Notes to the Consolidated Financial Statements beginning on page 9.

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Corteva, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)


(In millions)	Nine Months Ended September 30,
	2020		20191
Operating activities
Net income (loss)	$	658	$	(923)
Adjustments to reconcile net income (loss) to cash used for operating activities:
Depreciation and amortization	868		1,310
Benefit from deferred income tax	(153)		(427)
Net periodic pension benefit	(306)		(